Hormel Foods Corp HRL
Q2 2013 Earnings Call Transcript

Transcript Call Date 05/23/2013

Operator: Ladies and gentlemen, thank you for standing by. Welcome to the Hormel Foods' Corporation Second Quarter Earnings Conference Call. Throughout today's recorded presentation, all participants will be in a listen-only mode. After the presentation there will be an opportunity to ask questions.

I will now hand the conference over to your host, Mr. Kevin Jones. Please go ahead, sir.

Kevin C. Jones - Director, IR: Good morning, everyone. Welcome to the Hormel Foods' conference call for the second quarter of fiscal 2013. We released our results this morning before the market opened around 6.30 a.m. Eastern Time. If you did not receive a copy of the release, you can find it on our website at, under the Investors section.

On our call today is Jeff Ettinger, Chairman of the Board, President and Chief Executive Officer; and Jody Feragen, Executive Vice President and Chief Financial Officer. Jeff will provide a review of the operating results for the quarter. Then Jody will provide detailed financial results. The line will be opened for questions following Jody's remarks.

An audio replay of this call will be available beginning at 10.30 a.m. Central Time today, May 23, 2013. The dial-in number is 800-406-7325, and the access code is 4617224. It will also be posted to our website and archived for one year.

Before we get started with the results of the quarter, I need to reference the Safe Harbor statement. Some of the comments made today will be forward-looking and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those expressed in or implied by the statements we will be making. Among the factors that may affect the operating results of the Company are fluctuations in the cost and availability of raw materials and market conditions for finished products. Please refer to Pages 28 through 35 in the Company's Form 10-Q for the quarter ended January 27, 2013, for more details. It can be accessed on our website.

In order to assure that everyone has an opportunity to ask their questions, please restrict yourselves to one question with one follow-up.

Now, I'll turn the call over to Jeff.

Jeffrey M. Ettinger - Chairman, President and CEO: Thank you, Kevin, and good morning, everyone. We announced second quarter earnings this morning of $0.46 per share, down 4% from last year. Sales were $2.2 billion, an increase of 7%. Total volumes increased 4% despite a planned reduction in harvest levels at both our hog processing and turkey processing operations. The addition of SKIPPY peanut butter sales and the consolidation of our Don Miguel sales in our grocery product segment were a significant contributor to the sales gains. This will be the last quarter of comparison to quarters without Don Miguel product sales.

I will now take you through each segment. Our Grocery Products segment delivered a good quarter. Segment profit increased 10% and sales grew 49%, including sales of SKIPPY peanut butter and Don Miguel products. We were pleased that sales by Grocery Products were up 4% even excluding SKIPPY peanut butter and Don Miguel products. Sales gains in Grocery Products were led by CHI-CHI's and HERDEZ products, HORMEL Compleats microwave meals, and Dinty Moore stews. Sales of our HORMEL Compleats microwave meals increased for the second consecutive quarter, as our new cheesy pasta items helped to drive growth.

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